I’m quite often asked this question by friends and at barbeques. To me, it’s a simple answer but to explain this to someone who has no experience in the markets can be very confusing. So to alleviate that confusion, I thought I’d put pen to paper (or fingers to keyboard) and establish a guideline for what you need to do to get started investing in the stock market.
Guide #1: Be committed to your investing in the markets.
While property is viewed as a long-term investment, the stock market is viewed as a “Get rich quick” median or more like the lotto, where it’s a “Hope and Pray” the stock will rise quickly. This is why so many investors “take a punt” on speculative stocks, or look for advice from friends and family.
If you want to invest in the markets, you should approach it professionally and with commitment. Don’t buy shares and ‘hope’ they’ll go up and make you rich. This is a sure way of losing money in the markets.
Once you’ve gone through the following points, you will have a clearer idea on what decisions you need to make before investing in the markets. Investing is more than just choosing a stock to buy or sell. Start investing in Shares by having an Investment Plan that works, a strategy to manage Risk, and the commitment to sticking to that plan.
Guide #2: Seek an advisor who has a good track record
One persons goals for investing do not suite everyone. Quite often I’m asked about a stock or strategy to invest in the markets due to
Guide #3: Establish how much funds you are willing to commit to the markets
Guide #4: Seek a strategy that is going to suite your needs
Guide #5: Don’t watch the markets day to day and fret or fear that stock prices will fall
When you choose to purchase property, you deliberate over how much you want to invest/spend, where to buy, type of property, facilities, and on an emotional level, whether you like the property or not. But when it comes to investing in the stock market, most people use emotion only.
Common sense is one of the greatest tools you have for stock investment. For example; buying a Retail stock while consumer spending is decreasing is not a good idea. Yet, investors who are emotionally attached to specific companies will hold onto stocks that are underperforming.